The space economy has captured the spotlight this year, primarily driven by the highly anticipated initial public offering (IPO) of Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX. On June 12, the company made history with the largest initial public offering ever and closed the day with a valuation of around $2.1 trillion, putting it in the company of some of the world's largest companies.
That said, SpaceX doesn't have nearly the revenue of those behemoths and trades at an expensive valuation that prices in massive future growth, making the stock vulnerable to huge price swings. If you're an investor looking for exposure to the rapidly expanding space economy, here are two space stocks that are better buys before piling into SpaceX.
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Rocket Lab (NASDAQ: RKLB) is the biggest competitor to SpaceX's launch business and the second-most-used launch platform in the United States today. Over the past year and a half, Rocket Lab has made 35 launches, dwarfed by SpaceX's 260 over the same period. That said, Rocket Lab has carved out a niche with its small-lift Electron rocket, which enables it to serve small to medium-sized satellite customers.
Because its Electron rocket can carry payloads of only around 300 kilograms (660 lbs), Rocket Lab cannot currently carry large payloads into space like SpaceX can with its Falcon 9. However, its small rocket provides its customers with greater flexibility and control over the timeline while also enabling precise placement of these smaller satellites into orbit.
In addition, Rocket Lab has developed the Hypersonic Accelerator Suborbital Test Electron (HASTE), a launch platform specifically designed for defense and national security purposes. The advantage of HASTE is that it provides the government with high-cadence, cost-effective testing for hypersonic and suborbital payloads as the Pentagon evaluates various defense technologies. In March, Rocket Lab secured a $190 million contract to conduct 20 hypersonic test flights for its HASTE launch vehicle.
Rocket Lab's launch services business continues to grow steadily, but the company has another avenue for growth through its space systems business. Here, Rocket Lab designs and manufactures a wide range of space components and technologies, such as satellite buses, reaction wheels, star trackers, solar panels, separation systems, radios, and software. Of its $2.2 billion backlog, $1.3 billion is related to its space systems segment.
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